Pilbara Minerals share price charges higher on strong FY22 result

The Pilbara Minerals Ltd (ASX: PLS) share price is currently being charged up. At the time of writing, it is climbing 3.31% to $3.275 after the company released its FY22 result this morning.

This comes at a time when the S&P/ASX 200 Index (ASX: XJO) is down by 0.58%, so the ASX lithium share is materially outperforming the index today.

Firstly, let’s have a look at what the company said about FY23 because investors often like to look forward to what could happen in the next 12 months and beyond.

Pilbara Minerals FY23 guidance

In terms of production, Pilbara Minerals said that its spodumene concentrate for the 2023 financial year is expected to be between 540,000 and 580,000 dry metric tonnes (dmt). The Pilgan plant capacity is 360,000 tonnes to 380,000 tonnes per annum and the Ngungaju plant capacity is between 180,000 tonnes to 200,000 tonnes after a ramp-up in the quarter for the three months to September 2022.

The ASX lithium share also gave guidance about its unit operating costs, which are expected to be between A$635 per dmt and A$700 per dmt.

Pilbara Minerals said that costs are expected to be higher during FY23 due to elevated strip ratios and the ramp-up of the Ngungaju plant. It came to the projected cost range because of the uncertain environment, including the impact of COVID-19, labour shortages in the WA mining sector, supply chain disruptions and general inflationary cost pressures.

Beyond FY23, costs are “likely to decrease” once strip ratios moderate, production capacity is achieved at Ngungaju, plant throughput increases, better utilisation rates are achieved and synergies are won from the combined Pilgangoora operations.

Strong market conditions

One of the key factors that could influence the Pilbara Minerals share price is the performance of the lithium price, because it’s a commodity business.

Pilbara Minerals said lithium pricing remains “strong”, which places the company in “prime position to capitalise on current market conditions, including through the sale of spodumene concentrate” from the Ngungaju plant.

Despite projections of a big increase in supply of lithium over the next two decades, the deficit between supply and demand is expected to rise to 2040, which is likely to have “pricing implications”. The deficit is predicted to be equivalent to around 18 Pilgangooras.

FY22 result announcement

In terms of the 2022 financial year, Pilbara Minerals said its shipments of spodumene concentrate grew 28%, revenue soared 577% to approximately $1.2 billion and it generated a statutory net profit after tax (NPAT) of $561.8 million.

Pilbara Minerals’ managing director and CEO Dale Henderson said:

Having recently approved the expansion to grow production by a further 100,000 tonnes per annum, to a combined 640,000 tonnes to 680,000 tonnes per annum, and with the company now progressing towards a final investment decision to expand production to 1 million tonnes per annum, Pilbara Minerals commences FY23 in an exceptionally strong position.

The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production growth off a performing operating base. Further, chemicals participation with our downstream JV with POSCO and our midstream project provides another extension of value creation for our shareholders.

Pilbara Minerals share price snapshot

Over the last month, Pilbara Minerals shares have risen almost 30%. They are up 46% over the past year but are down 7% this year to date.

The post Pilbara Minerals share price charges higher on strong FY22 result appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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